Graduates will have to pay more to attend university under sweeping reforms being considered by the government.

Vince Cable: proposed a graduate tax

Higher graduate contributions were the ‘only possible way forward’ to make the higher education system fairer and sustainable, business secretary Vince Cable said on Thursday.

He was setting out a more ‘progressive’ system of funding that includes proposals for a so-called ‘graduate tax’.

And he admitted that, as the university sector became more competitive, it was inevitable some institutions would struggle and should be left to fail.

‘The reality is we are going to have to develop a model in which the balance of funding for higher education in England combines less public support and more private investment from those who benefit most from it,’ Mr Cable said.

Tuition fees stand at £3,225 a year. Under the proposals, graduates would not take out loans to pay tuition fees but would pay premiums depending on their earnings once they were working.

Mr Cable said he has asked former BP boss Lord Browne, who is leading a review into student funding, to look into proposals for a graduate tax.

‘It surely can’t be right that a teacher or care worker or research scientist is expected to pay the same graduate contribution as a top commercial lawyer or surgeon or City analyst whose graduate premium is so much bigger,’ Mr Cable added.

The University And College Union said it remained concerned about the future of university funding.

‘Vince Cable’s speech will do little to convince students or their parents that university debt would not increase under plans for a graduate tax,’ said Sally Hunt, UCU general secretary.